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US media mogul Rupert Murdoch was once rumoured to be an investor in Beijing-based electric appliances maker Xiaomi. The speculation was fuelled by a highly publicised meeting between the News Corp boss and Xiaomi’s founder Lei Jun in 2015, as well as Murdoch’s choice to make Xiaomi the first Chinese company he followed on Sina Weibo. As time went by no tie-up emerged, but Xiaomi might soon find itself associated with a financial news powerhouse again – this time as an investor.

Two Shanghai-based online media firms, Jiemian and Blue Whale Media, announced on February 28 that they had merged through a share-swap deal. The duo had respectively received investments from Xiaomi in 2015 and 2016.

Established in 2014 as a franchise under the Shanghai United Media Group (SUMG), Jiemian is one of the more successful attempts by lossmaking state media firms to produce more market-oriented content. With a focus on relatively in-depth reporting (WiC sources it frequently), Jiemian targets educated urbanites, or “independent minds” as its slogan pinpoints. By the end of last year it had amassed 12 million registered readers. It also runs J Media, China’s largest online network for zimeiti (the local term for popular or influential bloggers – many of them are ex-journalists or from the tech sector).

Meanwhile, Blue Whale Media – founded in 2010 by two journalists who had previously worked for state-run newspapers – is backed by Securities Times Financial Media Group, the designated journalistic outlet of China’s three financial watchdogs.

Starting out as an online platform for reporters to share their contacts and insight – and more recently offering them secretarial services too – Blue Whale now runs various sector-focused news portals with up to 4,000 independent financial journalists contributing content (Bloomberg, by comparison, has 2,700 globally). Blue Whale derives much of its revenues from advertising but in 2015 it also founded Cailian Press to produce a round-the-clock newswire that targets professional investors.

Ciweigongshe, a zimeiti focusing on China’s media landscape, suggests that the deal was crucial to Blue Whale because it needed a so-called ‘A-grade news licence’ to continue to distribute edited information online – because of a stricter government regulatory edict introduced last June.

The merged entity, named Jiemian-Cailian Press, believes it will have a valuation of Rmb5 billion ($790 million) and attract 100 million users – an estimate predicated on how quickly it believes digital media is superseding the paper-based press in China. An IPO is planned.

A report by ChinaVenture.cn suggested that private-sector tech investors such as Xiaomi would be the biggest beneficiaries of this “landmark merger” of Chinese media, although SUMG, which also operates the Jiefang Daily, remains Jiemian-Cailian’s controlling shareholder.

The state-owned colossus is expecting new media to contribute 53% of its income this year, up from 34.5% in 2017, and a mere 0.9% in 2014.

Another factor is the surging demand for information on A-shares, especially after their inclusion into MSCI’s equity benchmarks this June. This has prompted a lot of other media agencies to beef up their content lately. Beijing-based Caixin, for instance, joined hands with the private equity arm of Citic in February to buy the financial information database unit from London-based Euromoney Institutional Investor.

That $180.5 million deal is viewed as boosting Caixin’s data-mining capabilities on the back of Euromoney’s CEIC and EMIS, services which specialise in macroeconomic and industry intelligence about emerging markets.

While Jiemian-Cailian aims to become ‘China’s first media unicorn’ as well as forming the country’s answer to Bloomberg, one company that might not be rejoicing over the recent dealmaking in the sector is likely Wind Information. The subscriber-based service has long claimed itself to be China’s Bloomberg (see WiC217).

Planning to go public in the A-share market in 2020, the Shanghai-based Wind had a net income of Rmb8.7 billion in 2016, according to a filing made to regulators in December last year.

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